Canadian doctors warn fee cuts, pay inequalities will spur exodus

Canadian doctors say fee cuts, pay inequalities will spur exodus

The legendary Italian sports cars offered up by Ferrari-Maserati of Ontario start at well beyond $200,000, yet the Toronto-area dealership still manages to sell about 65 of each brand annually – plus 100 used vehicles.

A good portion of its well-heeled clientele, says sales manager Giuseppe Porretta, are physicians. “I would guess … about 10-20%,” he said.

Then there is Dr. Shady Ashamalla. Nearing the end of 17 years of university education and often-gruelling medical training, chipping away at a six-figure student debt, he ferries his two children around in a 2004 Toyota Echo. At age 36, Dr. Ashamalla is only now starting his career as a full-fledged specialist in minimally invasive cancer surgery.

“I’ve spent my entire adult life becoming what I am,” he said. “You watch your friends who go into other professions – lawyers, teachers, accountants, business folks — and they’re all done, they’re driving nice cars, they’ve bought their first homes and they’re working away … You do everything you can to not put the pause button on your life, but that’s an effort.”

From the Ferrari pilot to econo-car dad, physicians receive $19-billion from Canadian governments each year. It has been the fastest-growing chunk of health spending in recent years, due both to the swelling ranks of physicians, and fees that climbed an average of nearly 4% a year in the last decade – after slipping below inflation earlier.

Deb Matthews, Ontario’s health minister, this week suggested some doctors are overpaid, and ordered reductions in 37 specific fees. Physicians complain the reductions were poorly selected, will undermine patients’ access to good care and lead to something Canadians have not witnessed for years – an exodus of doctors to the United States.

Their dispute revives the question of how well doctors should be remunerated, and underlines dramatic variation in compensation between province and medical speciality.

Despite repeated, expensive attempts to more logically divvy up fees, ophthalmologists earn almost 70% more on average than brain surgeons, who take in almost double the income of psychiatrists, according to Canadian Institute for Health Information (CIHI) figures.

“There are terrible inequities within medicine,” said Michael Rachlis, a Toronto physician and health policy analyst. “And this has really almost nothing to do with the actual value of services. It’s just that some services … often because of technological change, end up being relatively overpaid.”

Comparisons with other industrialized countries suggest that, on average, Canada is among the most generous in remunerating its doctors, though the U.S. continues to out-pay in some specialities. Statistics and recruitment agencies report a net migration of physicians into Canada lately.

As the experience at the Maserati dealership attests, some doctors here fare extremely well, with 15 in Manitoba, for instance, charging over $1-million in fees last fiscal year.

Doctors are quick to point out, however, that the oft-cited billing figures for physicians hide overhead costs that can eat up as much as 70% of the total – though 30%-40% is more typical. They also note MDs put in more than a decade of post-secondary education and training, delaying earning-years until close to middle age, while the work can involve marathon work weeks and disruptive after-hours duty.

“Certainly, we make a handsome salary, there’s no denying that,” said Dr. Sherif El-Defrawy, 52, incoming chair of the University of Toronto ophthalmology department. He said his salary of about $400,000 is similar to what a typical, fee-for-service eye specialist would take home after expenses.

“But I wasn’t working when I was 24, so there’s a lot of potential loss there … (And) you really do spend a lot of evenings, a lot of weekends involved in the work … It takes a certain immersion in this profession, which is really your life.”

This is by no means the first time doctors and provincial governments have been at loggerheads over how much the profession earns. Rightly or wrongly, provinces identified the rising costs of physician services in the early 1990s as a key and unjustifiable drain on resources, triggering a somewhat-disastrous curb in medical-school enrolments, as well as billing caps and other free restrictions. From 1975 to 1998, doctor compensation rose by less than the rate of inflation, CIHI reports.

The austerity measures helped fuel a flood of physicians south of the boarder, with an average of 186 Canadian-trained doctors a year ending up in the U.S. from 1996 to 2004, according to a study in the Canadian Medical Association Journal.

Shaken by a growing shortage of physicians and expanding patient wait lists, governments in the 2000s started boosting medical school enrolment again, while approving sweeter pay deals. Fees rose by an average of 3.6% a year, CIHI says.

How much, then, do Canadian doctors make? Taking CIHI figures on gross billings in 2009-10 and subtracting the 40% in overhead costs often cited by medical associations, average net incomes range from $124,000 for psychiatrists to $143,000 for family doctors, $224,000 for neurosurgeons, $228,000 for dermatologists, $280,000 for cardiac surgeons, and $374,000 for ophthalmologists.

National averages, though, obscure gaping regional differences. The average $827,000 billed by Saskatchewan’s ophthalmologists, including overhead, is $270,000 more than Quebec’s average eye doctor takes in, for instance.

The wide gaps between specialities are also a chronic concern, though little action has been taken to rectify it.

Ontario spent $4-million on a report released in 2002 that used a complex formula to methodically calculate the value of every medical service on the schedule of fees. The result was a major reshuffling of the pool of money paid to doctors, with some – like radiologists – seeing major drops in their fees and others – such as neurosurgeons – graced with increases.

Perhaps the most-cited inequity involves fees for some eye operations, such as cataract removal. New technology makes them faster to carry out, but in many provinces the payment has stayed the same, resulting in something of a windfall for ophthalmologists.

The reaction to the recommendations was swift. The losing specialties voiced outrage, predicting harm to patients and a mass flight out of the province. As had happened when B.C. and Alberta went through a similar process, nothing ever came of the report.

Comparing Canada to other countries is tricky, given the different methods of paying doctors and varying costs of living. A 2009 report by the Organization for economic co-operation and development (OECD) tries to even it all out, relating doctor pay to each nation’s average worker salaries. It puts Canadian specialist doctors at 4.7 times the average wage, higher than all but Germany and Holland, with the U.K. at 2.6 times and France 3.2.

The report does not include the U.S. Surprisingly, some figures suggest this country is now more generous.

Ms. Matthews office cites statistics from the provincial Institute for Clinical Evaluative Sciences and the MGMA Physician Compensation Survey in the States that indicate Ontario family doctors make $143,000 more on average than U.S. counterparts, radiologists pull in $203,000 more and cardiologists $141,000 more.

Another study, published last year and based on 2008 statistics, paints a different picture, though, showing American orthopedic surgeons earning more than twice their Canadian colleagues.

The Ontario fee reductions were aimed in part, the province argues, to address some of those inter-specialty disparities Dr. Rachlis and others cite. It has lowered fees for radiologists, ophthalmologists and cardiologists where it says technology has made procedures quicker. Doctors, stressing that their main concern is how the cuts will affect the quality of health care, call the analysis flawed and misinformed.

Dr. Ashamalla said he is most anxious that the changes could hurt his patients. Still, he said he takes exception to an insinuation that seems to emerge perennially from government: some physicians are getting too much.

“For the past eight years, I’ve spent no less than 80, 90 hours a week in the hospital and it often gets far more excessive than that,” he said. “You don’t go into medicine because you want to be filthy rich. To put this much effort into something for 17 years, you could probably do better.”